FACILITATING FOREIGN DIRECT INVESTMENTS IN INDIAN BUSINESS AND INDUSTRY
FACILITATING FOREIGN DIRECT INVESTMENTS IN INDIAN BUSINESS AND INDUSTRY
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THINKING OF INVESTING IN THE WORLD'S FASTEST GROWING ECONOMY? TRUST FDI MANAGER TO PROVIDE A COMPLETE BESPOKE SOLUTION.
The newly elected Indian government is examining India’s foreign direct investment policy to look for new areas that can be opened to overseas investors and sectors that still face hurdles despite being on the automatic route. This is an exciting time to invest in India.
ARE YOU SEEKING FOREIGN DIRECT INVETMENT FOR YOUR PROJECT IN INDIA ? FDI MANAGER HEPLS YOU ACCESS FDI INVESTORS IN YOUR BUSINESS SECTOR.
If you are a project owner in India, looking for Foreign Direct Investment into your project, you have arrived at your dream destination. Just register your project with us straightaway and let the expe
ARE YOU SEEKING FOREIGN DIRECT INVETMENT FOR YOUR PROJECT IN INDIA ? FDI MANAGER HEPLS YOU ACCESS FDI INVESTORS IN YOUR BUSINESS SECTOR.
If you are a project owner in India, looking for Foreign Direct Investment into your project, you have arrived at your dream destination. Just register your project with us straightaway and let the experts at FDI Manager take over from there and do the needful.
JOIN OUR EXPERT PANEL OF CONSULTANTS. WE VALUE YOUR EXPERTISE AND PAY YOU WELL FOR YOUR GROUND BREAKING CONTRIBUTION TO FDI.
This is a huge opportunity for professionals in their capacity as either individuals or organizations to be an empanelled consultant for FDI Manager. Lawyers, Retired Bureaucrats, Health Practitioners, Engineers, Management Consultants, and many more...
FDI Manager consists of a team of expert FDI consultants focused primarily into the growing Indian economy poised for a phenomenal growth in the coming years and decades. It has long years of combined relevant experience helping clients prepare for the unknown while meeting their financial goals. Ask us about:
As an independent financial services firm, we can access many different products so you can get the right products and services.
FDI Manager assists clients setting up business in India and provides complete support services to achieve their business objectives. Whether a startup or an individual investor or a corporate, FDI Manager helps initiate their investment journeys in India. The efficient services, expert guidance and assistance provided by FDI Manager ensure clients benefit the maximum out of their foreign direct investments in India. FDI Manager provides all necessary support to foreign investors looking to start or expand their business in India. FDI Manager services include:
FDI Manager provides a massive window of opportunity to Indian companies and project owners who want to benefit directly from Foreign Direct Investments. By highlighting and showcasing their projects and services on this Foreign Direct Investments Platform, FDI Manager not only generates investor interest across the globe but also follows up with potential investors for successfully setting up Joint Ventures in India.
Backed by immense consulting expertise and single point dispensing of support services, FDI Manager is uniquely placed to service its clients. If you have a project or services that seek Foreign Direct Investments, then FDI Manager is your correct destination.
Digital Enablement Project
The Executive Summary should tell the prospective investor what the project promoter wants. There must be a ONE LINE defining statement included in the summary that clearly states what the project promoter is asking for. The summary should be kept short and provide a synopsis of the entire business plan. It should provide a concise and optimistic overview of the planned business that captures the reader's attention and gives them an interest in learning more about it.
SECTOR-48, SOHNA ROAD, GURGAON-122018 HARYANA, INDIA
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Foreign direct investment equity inflows into India crossed the $500 billion milestone between April 2000 to September 2020, strengthening the country’s credentials as an investment destination. According to data released by the Department for Promotion of Industry and Internal Trade, the inflows during the period stood at $500.12 billion. About 29% of the FDI came through the Mauritius route. It was followed by Singapore (21%), the U.S., the Netherlands, Japan (each 7%), and the U.K. (6%).
India received $144.71 billion from Mauritius and about $106 billion from Singapore during the period under review.
The other big investors have been from Germany, Cyprus, France and Cayman Islands. Since 2015-16, FDI inflows have been recording significant growth. In that fiscal, the country received $40 billion FDI, an increase of 35% over the previous year. In 2016-17, 2017-18, 2018-19 and 2019-20, the investments stood at $43.5 billion, $44.85 billion, $44.37 billion and $50 billion, respectively. The key sectors which attracted the maximum of these inflows include services segment, computer software and hardware, telecommunications, trading, construction development, automobile, chemicals, and pharmaceuticals.
This growth is a strong reflection of the market potential of India coupled with the steady state of market reforms that India has undertaken since 2000, including opening up of various sectors of the economy to 100% FDI over the last 5 years.
THE SCOPE FOR FDI IN INDIA
According to Department for Promotion of Industry and Internal Trade (DPIIT), FDI equity inflow in India stood at US$ 500.12 billion between April 2000 and September 2020, indicating that Government's effort to improve ease of doing business and relaxing FDI norms has yield results.
FDI equity inflows in India stood at US$ 30.0 billion in 2020-21 (between April 2020 and September 2020). Data for 2020-21 indicates that computer software and hardware sector attracted the highest FDI equity inflows of US$ 17.55 billion, followed by the service sector at US$ 2.25 billion, trading at US$ 949 million and chemicals (other than fertilisers) at US$ 437 million.
In 2020-21 (between April 2020 and September 2020), India received the maximum FDI equity inflows from Singapore (US$ 8.30 billion), followed by the US (US$ 7.12 billion), Cayman Islands (US$ 2.10 billion), Mauritius (US$ 2.0 billion), the Netherlands (US$ 1.49 billion) and the UK (US$ 1.35 billion).
In 2020-21 (between April 2020 and September 2020), Gujarat received the maximum FDI equity inflows of US$ 16.0 billion, followed by Maharashtra at US$ 3.61 billion, Karnataka at US$ 3.66 billion and Delhi at US$ 2.66 billion.
RECENT FOREIGN DIRECT INVESTMENT MILESTONES
Some of the significant FDI announcements made recently are as follows:
In December 2020, the government of Uttar Pradesh agreed to provide Samsung Display Noida Private Limited with special incentives to set up a mobile and IT display product manufacturing unit. Under the Central Government's scheme for promotion of manufacturing electronic components and semiconductors (SPECS), Samsung will also receive a financial incentive of Rs. 460 crore (US$ 62.61 million). This project will develop a global export hub in Uttar Pradesh and will help the state attract more foreign direct investments (FDI).
In December 2020, changes in the guidelines for the provision of Direct-to-Home (DTH) services have been approved by the Union Cabinet, enabling 100% FDI in the DTH broadcasting services market.
In October 2020, 16 qualifying applicants under the PLI scheme were approved by the Ministry of Electronics and Information Technology (MeitY). For five years, subsequent to the base year (FY2019-20), the PLI for large-scale electronics production will extend an incentive of 4-6% on the incremental sales of products manufactured in India to the qualifying firms. Samsung, Foxconn, Rising Star, Wistron and Pegatron are the foreign mobile phone manufacturing companies that have been approved in the mobile phone market.
Under Magnetic Maharashtra 2.0, the state implemented core investment promotion recovery initiatives such as Plug & Play Infrastructure, Maha Jobs, Maha Parwana, Investor First Programme, Capacity Augmentation of MIDC Land Banks and Dedicated Country Desks. This accelerated the economic growth and improved consumer trust, placing the state as one of the country's most preferred investment destinations, flourishing the state's industrial sector.
(1) FDI up to 100 per cent is allowed under the automatic route in all activities/sectors except the following, which will require approval of the Government:
(a) Activities/items that require an Industrial Licence;
(b) Proposals in which the foreign collaborator has a previous/existing venture/tie up in India in the same or allied field.
(c) All proposals relating to acquisition of shares in an existing Indian company by a foreign/NRI investor.
(d) All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted.
(2) FDI in areas of special economic activity:
(a) Special Economic Zones:
100 per cent FDI is permitted under automatic route for setting up of Special Economic Zone. Units in SEZ qualify for approval through automatic route subject to sectoral norms. Details about the type of activities permitted are available in the Foreign Trade Policy issued by the Department of Commerce. Proposals not covered under the automatic route require approval by FIPB.
(b) Export Oriented Units (EOUs):
100 per cent FDI is permitted under automatic route for setting up 100 per cent EOU, subject to sectoral norms. Proposals, which are not covered under the automatic route would be considered and approved by FIPB.
(c) Industrial Park:
100 per cent FDI is permitted under automatic route for setting up of the Industrial Park. Electronic Hardware Technology Park (EHTP) Units All proposals for FDI/NRI investment in EHTP Units are eligible for approval under the automatic route subject to the parameters listed. For proposals not covered under automatic route, the applicant should seek separate approval of the FIPB, as per the procedure outlined in the policy.
(d) Software Technology Park Units:
All proposals for FDI/NRI investment in STP Units are eligible for approval under automatic route subject to parameters listed. For proposals not covered under automatic route, the applicant should seek separate approval of the FIPB, as per the procedure outlined in the policy.
According to Organization for Economic Co-operation and Development (OECD), an investment of 10% or above from overseas is considered as FDI. For a country where capital is not readily available, Foreign Direct Investment (FDI) has been an important source of funds for companies. Under FDI, overseas money, either by an individual or entity, is invested in an Indian company.
According to Organization for Economic Co-operation and Development (OECD), an investment of 10% or above from overseas is considered as FDI. In India, foreign direct investment policy is regulated under the Foreign Exchange Management Act, 2000 governed by the Reserve Bank of India
One can invest in India - either under Automatic Route which does not require approval from RBI or under Government Route, which requires prior approval from the concerned Ministries/Departments via a single window - Foreign Investment Facilitation Portal (FIFB) administered by the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry, Government of India.
Apart from specified 11 sectors/activities (mentioned below), where Government approval is mandatory, applications where there is a doubt over which Ministry should the application fall under, DIPP has the responsibility of identifying who would be the concerned authority. Proposals from NRIs and Export Oriented Units, applications relating to issues of equity for import of capital goods/equipment, pre-operative/pre-incorporation expenses, etc. are also handled by DIPP.
For effective handling of cases, monthly reviews by the concerned Ministries/Authorities and quarterly review meetings, co-chaired by Secretary, Department of Economic Affairs and Secretary, DIPP are also proposed to be undertaken to discuss pendency of proposals with the Government.
Various categories of foreign investors - Foreign Portfolio Investors, Foreign Institutional Investors, Foreign Venture Capital Investor, Non-Resident Indians can hold stakes in Indian business entities (company, partnership firms, proprietary concerns, LLPs) subject to conditions and sectoral caps on ownerships.
FIIs/FPIs are allowed to invest and trade in equity securities, with a maximum total investment of 24 percent of the issued and paid up capital of a company. This limit can be raised up to the prescribed sectoral cap of that particular industry by passing a special resolution to the effect.
Every non-resident entity is allowed to invest in India either under Automatic or Government Approval Route, except in prohibited sectors. However, individuals or entities of Bangladesh and Pakistan can invest only under Government Route. Check out list of sectors which require prior approval as well as sectors under automatic route along with relevant sectoral caps by clicking on the links.
FDI is a capital account transaction and any violation of its regulations attracts penal provisions under FEMA. RBI administers FEMA and Directorate of Enforcement, Ministry of Finance - Government of India has the authority to investigate in case of any violation of its rules.
FDI IN PARTNERSHIP FIRM/SOLE PROPRIETARY CONCERN
NRIs or Person of Indian Origin (PIO) resident outside India are allowed to contribute to the capital of a partnership firm or sole proprietary concern without prior approval, provided:
1. The contribution is on non-repatriation basis
2. Investment is done as an inward remittance, or out of NRE/FCNR (B)/NRO account maintained with AD Category-1 Bank.
3. The Indian firm or proprietary concern should not be engaged in agricultural, print media or real estate business.
In the following cases, investors may apply for prior permission of RBI and Government of India, provided the last two conditions mentioned above are adhered to:
1. Where investment is preferred to be repatriable by NRIs/PIO.
2. For investors other than NRIs/PIO.
The decision for the same will be taken by RBI and Government of India on case-by-case basis.
FDI IN LIMITED LIABILITY PARTNERSHIP
FDI in LLPs was liberalized significantly in 2015 with the objective to promote foreign investment inflows in the country. Up to 100% FDI is allowed in LLPs, provided you are adhering to the specific sectoral limits. In that case, the investment will not require any prior approval by FIPB.
1. There are no conditions relating to FDI-linked performance.
2. Foreign companies or individuals can be appointed as Designated Partner as required under Section 7 of Limited Liability Partnership Act, 2008.
3. LLPs can make further downstream investment in another company or LLP. Earlier they were not permitted to make any downstream investments.
4. Repatriation of capital is permissible with adherence of appropriate pricing guidelines and reporting requirements.
5. All investments should comply with relevant provisions of LLP Act, 2008.
6. LLPs can avail External Commercial Borrowings (ECBs).
7. FPIs/FVCIs can contribute to the capital of LLPs in India.
8. In case of companies with FDI, converting into LLP can be done under the automatic route if the investment in sector concerned is within corresponding sectoral limit for automatic investment route.
FDI IN PRIVATE LIMITED COMPANY
A Foreign business entity can enter India via a number of alternatives, subject to general conditions mentioned in FDI Policy:
1. As an Indian Company-
a. By setting up a wholly owned subsidiary
b. Joint Venture with an Indian entity/person
2. Operate as a foreign company and be registered with the Registrar of Companies, MCA.
a. Opening up Liaison office - This type of office is only allowed to collect market information and liaison with the foreign company. They are not allowed to earn income from any activities.
b. Branch Offices - The scope of activities of BOs is much larger as compared to Liaison Offices. BOs are allowed to generate revenue by various alternatives, such as-
i. Providing professional services
ii. Providing technical support for products imported/assembled/manufactured by the parent/holding company.
c. Project Offices - Set up to execute specific projects, project offices are allowed in India if:
i. The foreign entity has secured a contract in India, which will be funded via inward remittance by either a bilateral or multilateral financing agency.
ii. Loan has been sanctioned by a public financial institution or bank to the Indian company contracting the project.
If the above conditions are not met, the foreign investor/entity will have to make an application with RBI via its AD bank
Partnership firms and sole proprietary concerns set up abroad are not allowed to establish Branch or liaison offices in India. Branch/Liaison/Project Offices have to open non-interest bearing current accounts in RBI through AD Banks. Application for setting up offices in India has to be made in Form FNC-1 to RBI along with:
1. Certificate of Incorporation or Memorandum & Articles of Association attested by Indian Embassy or Notary Public in their home country.
2. Latest Audited Balance Sheet
This form has to be submitted to the designated AD bank for further submission to the relevant department of Reserve Bank of India (Foreign Investment Division), Mumbai.
NRIs are also allowed to contribute to capital of Indian companies by investing in shares on Recognized Stock Exchanges under Portfolio Investment Route. The investment can be repatriable or non-repatriable, but the maximum limit of investment is 10% of paid-up capital of the relevant company. This limit can be raised up to the 24% by passing a special resolution to the effect. Investment is done as an inward remittance, or out of NRE/FCNR (B)/NRO account maintained with AD Category-1 Bank. A report of such investments has to be filed with RBI by AD Bank.
FDI IN SMALL SCALE INDUSTRIES
Except for the prohibited sectors, foreign investors are allowed to invest in small-scale industrial unit operating in various sectors. The investment is limited to 24% of paid-up capital of an SSI unit. To issue more than 24% to foreign investors, SSI units have to comply with the following conditions:
1. Give up its status as SSI, i.e. exceeding prescribed limits of investment in plant and machinery according to Micro, Small and Medium Enterprises Development Act, 2006.
2. Not engage in manufacture of reserved items.
3. Comply with relevant sectoral caps.
FDI proposals are processed following a standard operating plan devised by DIPP. The process includes:
1. Submission of proposal and uploading documents (mentioned below) on Foreign Investment Facilitation Portal.
2. Department of Industrial Policy and Promotion (DIPP) assigns the case to the concerned Ministry within 2 working days.
a. Submission of physical copies to concerned department is not required in case of digitally signed documents.
b. For applications not digitally signed, online communication to applicant will be made to submit one signed physical copy of the proposal to the Competent Authority. Applicants are required to submit required documents within 5 days of such intimation.
3. The proposal is circulated online within 2 days to Reserve Bank of India for review from FEMA perspective. All proposals are shared with Ministry of External Affairs (MEA) and Department of Revenue (DoR) for record. Any advice/comments from above mentioned departments are directly shared with concerned Administrative Ministry/Department assigned to decide on the proposal.
4. Proposals are scrutinized within 1 week and additional information/clarifications, if required, are asked for.
5. On getting all required information, the Competent Authority is required to give out its decision in next two weeks. Approval/rejection letters are sent online to the applicant, consulted Ministries/Departments and DIPP.
a. Where total foreign equity inflow is more than Rs 5000 crore, the Competent Authority is required to place the same to Cabinet Committee on Economic Affairs for consideration within timelines.
Following documents are required to be uploaded along with the proposal. Please note, this list is not an exhaustive list - other documents may be required based for specific cases.
1. From both Investee & Investor Companies/Entities:
a. Certificate of Incorporation
b. Memorandum of Association (MOA)
c. Board Resolution
d. Audited Financial Statement of Last Financial Year
e. Article of Association
2. List of Names, addresses and identification proof of all foreign collaborators of the Investor Company/Entity.
3. Pre-and Post-investment shareholding pattern of the Investee Company.
4. An Affidavit stating that all information provided in hard copy and online is the same and correct.
5. In case of existing ventures, copy of joint venture agreement/shareholders' agreement/ technology transfer/trademark/brand assignment agreement (as applicable).
6. Copy of Downstream Intimation.
7. Copy of relevant past FIPB/SIA/RBI approvals, connected with the current proposal.
8. Relevant Foreign Inward Remittance Certificate (FIRC) in case investment has already flowed in.
9. High Court order in case of scheme of arrangement.
10. Valuation certificate as approved by a certified Chartered Accountant.
As of February 2019, the Government of India is working on a road map to achieve its goal of US$ 100 billion worth of FDI inflows.
In February 2019, the Government of India released the Draft National e-Commerce Policy which encourages FDI in the marketplace model of e-commerce. Further, it states that the FDI policy for e-commerce sector has been developed to ensure a level playing field for all participants.
Government of India is planning to consider 100 per cent FDI in Insurance intermediaries in India to give a boost to the sector and attracting more funds.
In December 2018, the Government of India revised FDI rules related to e-commerce. As per the rules 100 per cent FDI is allowed in the marketplace based model of e-commerce. Also, sales of any vendor through an e-commerce marketplace entity or its group companies have been limited to 25 per cent of the total sales of such vendor.
In September 2018, the Government of India released the National Digital Communications Policy, 2018 which envisages increasing FDI inflows in the telecommunications sector to US$ 100 billion by 2022.
In January 2018, Government of India allowed foreign airlines to invest in Air India up to 49 per cent with government approval. The investment cannot exceed 49 per cent directly or indirectly.
No government approval will be required for FDI up to an extent of 100 per cent in Real Estate Broking Services.
In September 2017, the Government of India asked the states to focus on strengthening single window clearance system for fast-tracking approval processes, in order to increase Japanese investments in India.
The Ministry of Commerce and Industry, Government of India has eased the approval mechanism for foreign direct investment (FDI) proposals by doing away with the approval of Department of Revenue and mandating clearance of all proposals requiring approval within 10 weeks after the receipt of application.
The Government of India is in talks with stakeholders to further ease foreign direct investment (FDI) in defence under the automatic route to 51 per cent from the current 49 per cent, in order to give a boost to the Make in India initiative and to generate employment.
In January 2018, Government of India allowed 100 per cent FDI in single brand retail through automatic route.
India has become the most attractive emerging market for global partners (GP) investment for the coming 12 months, as per a recent market attractiveness survey conducted by Emerging Market Private Equity Association (EMPEA).
Annual FDI inflows in the country are expected to rise to US$ 75 billion over the next five years, as per a report by UBS.
The Government of India is aiming to achieve US$ 100 billion worth of FDI inflows in the next two years.
The World Bank has stated that private investments in India is expected to grow by 8.8 per cent in FY 2018-19 to overtake private consumption growth of 7.4 per cent, and thereby drive the growth in India's gross domestic product (GDP) in FY 2018-19.
SEE THE LATEST FDI POLICY INITIATIVE BY THE GOVERNMENT OF INDIA
Foreign Direct Investments Into India - FDI Manager
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